The Influence of Tax Auditors' Emotions on Tax Audit Negotiations and Tax Compliance

• In Event: Taxpayer Decision Making in Light of Tax Authority Choices and Emotions

Abstract

We study the effects of tax auditors’ emotion expressions during tax audit negotia-tions. A first experiment shows that auditors expressing anger obtain more conces-sions from taxpayers than auditors expressing happiness. Thus, taxpayers interpret auditors’ emotions strategically and do not respond affectively. A second experi-ment shows that the experience with an auditor who expressed either happiness or anger reduces taxpayers’ post-audit compliance compared to the experience with an emotionally neutral auditor. Apparently, taxpayers use their experience with an emotional auditor to rationalize subsequent non-compliance. Overall, our findings demonstrate potentially detrimental effects of auditors’ positive and negative emo-tion expressions and point to the benefits of avoiding emotion expressions: avoid-ing them does not result in fewer concessions from taxpayers than expressing an-ger, leads to a better evaluation of the relationship, and reduces taxpayers’ post-audit non-compliance.

Authors

• Kay Blaufus, Leibniz Universität Hannover

• Ulfert Gronewold, University of Potsdam

• Jan-Robert Kirchner, University of Potsdam